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What if the Penn Central Merger Did Not Happen

PENN-CENTRAL MERGER: AN OPEN LETTER


If we had foresight and if only a few important things had been different, the course of history could have been changed".

Yes, I understand why it came about. I have looked at all the factors many times.

The New York Central (NYC) had had problems over the last several years, but it had recently turned the corner. Some of this recovery was the result of initiatives begun by the Robert Young / AE Perlman administration, beginning in 1954. Income was on the rise in the 1960's. Key initiatives were new, more efficient yards; passenger service improvement programs like the "Empire Service"; freight service improvement programs like Flexi-Flow, Flexi-Van, and a common sense to Less-Than-Carload (LCL).

The Pennsylvania Railroad (PRR) might have been the "Standard of the World" before WW2, but the state of their facilities by 1968 was far below that of the Central.

Nationwide, all railroads were experiencing problems with the decline of passenger traffic as airlines and personal cars siphoned them off; yet passenger trains could not be easily discontinued.


WHAT IF?


(1) Relief came for the losses of commuter operations. NY Governor Nelson Rockefeller had found a solution to the Long Island Railroad issue and was finding a solution to Robert Moses. He wanted to be a "national level" politician. A solution for other railroads is something he might have done. Connecticut was concerned too, just took them a while to act. New Jersey didn't know and didn't care: they just assumed somebody would buy more busses, the Port Authority would build an even bigger bus terminal in Manhattan, and residents could just leave for work a little earlier.

(2) Mail and express business. President Johnson killed the railway mail service, supposedly to reward airlines that supported his campaign. Too bad President Kennedy got shot. REA was stuck on old ways and could not compete with forward-thinking companies like UPS. Head End business was crucial to the railroads.

(3) National initiative to rationalize travel between airlines, trains, busses would have been a really futuristic idea. Could have been something like promoting busses for distances under 300 miles. Allocating trains for distances of 100 to 500 miles. Promoting air travel for distances over 400 miles. Yes, there would be a lot of exceptions. Yes, there would be differences because of population density. Commuter rail in close proximity to large cities being one of them. Then there was an excellent rail leadership that could have helped: John W. Barriger, Alfred Perlman, W. Graham Claytor Jr.

(4) Deregulation: not until 1980's. Why so long? The Interstate Commerce Commission had a place in life when highways were dirt roads and the Wright brothers were still selling bicycles.

Then there was the airport subsidy. Why did every town need an airport? Let's take a look in Central New York at Albany versus Utica. A distance of about 100 miles. In addition, Syracuse was even closer to Utica, and on the same excellent rail line. What if a high-speed rail line existed between the three cities? France implemented this concept over the last, at least, 50 years. They did not abandon their rail network, but supported it. In the meantime, the major network was electrified.

One thing we did not consider until recently was Global Warming: people who had these abstract thoughts were "kooks" until Al Gore lent true credibility to reality.

Now, what about the other Eastern railroads? Could the New Haven have survived? plus "What if the New Haven never merged with Penn Central?"

What about the Erie-Lackawanna (EL), Baltimore & Ohio (B&O), Reading (RDG), Lehigh Valley (LV)?

Perlman (a leader like Harry Truman: not liked when he was in office, but considered great well after he left), put in some of the most advanced ideas ever in the railroad industry. When he got into Penn Central (PC), his hands were tied by the "finance types" from the Pennsylvania Railroad.

Here's a what-if: The merger gets called off by NYC, and the PRR and New York, New Haven & Hartford Railroad(NYNH&HRR or NH) merge without NYC? Think about this: shared connection over New York Connecting/Hell Gate Bridge. Now, I don't know what Penn Station was like then as far as congestion, but what if this enables the NH to divert its traffic from NYC owned Grand Central Terminal (GCT), where it pays fees to use, to Penn? After all, one of the NH's downfalls was its lack of its own access to NYC. That's why they tried to push off traffic on the New York, Westchester and Boston Railway (NYW&B), after all.
Pros:
1. No fees to access GCT over Harlem Line.
2. Common infrastructure with PRR (catenary) and no need for dual-mode equipment.
3. Additional (revived) stations on Harlem River line.
4. Gain west-side access for commuters (already running LD trains there)
5. Connections to Long Island.
Cons:
1. Lose GCT access (east-side)
2. Congestion issues.
3. Lose stations at Pelham, Columbus Av, and Mt. Vernon (or have to run shuttle trains to New Rochelle).

Maybrook traffic declined after January 1, 1969 because Penn Central wanted to carry the freight from Chicago or whereever rather than share it with the EL or the B&O or any other railroad. The NYC Boston and Albany route via Selkirk was the best way into New England. The former New York Central east - west mainline was far superior to the former Pennsylvania east - west mainline with a better track structure in better shape, much less grades resulting in less cost to move a car of freight and very modern yards and terminals. The decline in operations in and out of Maybrook was not immediate but it was steady and yes by 1974 there was only one round trip to handle traffic with both the EL and Lehigh & Hudson River (L&HR). I know a lot of people liked the Erie Lackawanna but its freight route was far inferior to the New York Central.

If the NYC and NH had worked so well together, than why not a merger between those two, without PRR? That saves the fees the NH had to pay NYC for GCT, and would have allowed the NYC (as it did Conrail) pretty much access anywhere in New England while getting rid of inefficient routes.

What would have happened without the merger? I find it hard to imagine any big railroad in the Northeastern U.S. making it in the long term without the Staggers Act regulatory reforms which were in part a response to the Penn Central collapse, but the New York Central would have been able to struggle along better than the others . But it was struggling: nowhere near as much deferred maintenance as on the PRR.

Pre-PC merger plans of both PRR and NYC were more realistic. Specifically how NYC wanted to merge with C&O and B&O and PRR sought merger with N&W and Wabash (WAB). One of his contentions is that these mergers would have created far more successful railroad systems and in fact, would have created a situation in the Northeast akin to what we have now in the post Conrail era with the routes absorbed by Norfolk Southern (NS) and CSX respectively.

N&W got control of EL, and Delaware & Hudson (D&H) BECAUSE OF the PC merger. I have read "Wreck of the Penn Central, and all this was in preparation of the merger. D&H bridged lots of PRR traffic to New England. In this case, let's try another what if. Buck Dumaine had proposed a Bangor and Aroostook (BAR)- Maine Central (MEC)- Boston & Maine (B&M)-D&H combination. He may have tried for EL too, especially if he got some concessions from any combination of PRR, NYC, C&O, or N&W. Those concessions being given redundant lines (due to the merger) to strategic locations. I agree that there were too many other stragglers namely, LV, Central Railroad of New Jersey (CNJ), NH, L&HR, RDG, etc. Although PRR-N&W and NYC-C&O finally happened (Conrail split), mind this was after the laws changed. This allowed the excess lines to be merged. Perhaps these smaller lines could exist as "short lines" and work with others to create efficient "alphabet routes".

It would have been nice to see a PRR-N&W (including Wabash and Nickel Plate (NKP), of course) merger, and NYC-C&O. I have one concern on this what-if though - the Reading. It seems "logical" that the RDG would have jumped on with NYC due to the B&O connection. However, one of the good factors in the creation of Conrail was allowing trains from PRR in Harrisburg to travel over Reading trackage to Allentown, then onto LV/CNJ track to New York. It would seem logical to me then, that PRR would need the Reading to effectively compete against the Central in Chicago-NYC traffic.

After having read Richard Saunders' Merging Lines, I find it even more appalling that the PRR under Symes allowed the N&W to slip through its grasp. According to the book, the ICC essentially gave the PRR a choice - N&W or NYC. Considering the interests in the Nickel Plate and Wabash, and the fact that the PRR had been approved for control of the Lehigh Valley, allowing it to use the LV/NKP connection to run the EL out of business - I still just don't understand what happened here. The ICC might not have allowed full merger, but the PRR controlled enough profitable roads through the Pennsylvania Company and Pennroad that throwing it all away for NYC just looks like an awful, awful decision.

It seems it was a reality that long distance passenger (and for the matter commuter trains) was a money loosing business. When the merger "buyout" happened why then did the goverment allow this to happend instead of taking over the long distance and commuter trains like they did less then 10 years later? Would this have saved PC and inturn save the EL?

Nothing would have saved the PC. It was the wrong merger of the wrong railroads in the wrong place at the wrong time. It took Amtrak to save the intercity passenger trains ( which, in spite of its present troubles, it actually accomplished) and Conrail to save the freight service in that area. By 1968, the PRR was a shell of its former self, financially-- the NYC may have been in better shape, but the New Haven was a financial basket case. The PC was doomed before it was born.

For the most part, the service and trains were "pretty shabby". The sleepers were not too bad and the service in them was fairly decent too. The trains themselves, terrible. Probably the best trains were the former New York Central Empire Service trains between New York - Albany - Buffalo. They generally terminated in Buffalo at the old Central Terminal at that time. The New York Central fixed up some coaches with new seating or at least new upholstry on them and the AC and heat were quite good too. Probably the best trains other than maybe the Metroliners.

By Ken Kinlock at kenkinlock@gmail.com
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NY Central Research


The Central always had a strong research activity. West Albany had once been a technology center. Not only famous for Engine 999, but many technical improvements were developed here.

One of the most famous railroad scientists, Dr. Plimmon H. Dudley, worked for the New York Central. He was considered the "scientist of rails".

In 1968, Pennsylvania Railroad Test Department placed under an ex-NYC man, orders PRR test facilities at Altoona closed and PRR test files destroyed, all testing and research concentrated at NYC facility in Collinwood, OH.

One of the things that Mr. Perlman was fond of was the NY Central Research Lab at Collinwood, Ohio. This center is where the M-497 (jet-powered Rail Diesel Car) was developed. A lot of other great things came from there such as the Cherry picker for working on signals over the track and not disturbing the movement of trains and the use of remote crt's for access to the main computer at 466 Lexington Ave. Remember Mr. Perlman was from MIT so technology was importanr, but he had no money to work with after all of the thefts and misinvestments with the cash.
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See KC Jones BLOG about Railroad History
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More railway stations you will enjoy. Stations on the Housatonic Line. Maps of railway stations. Railway stations along the old Central New England Railway.

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Flexi-Van

New York Central would have continued to work on such advanced projects as Flexi-Van.


During the early 1960s, the NYC “bet the ranch” on Flexi-Vans as the containerized freight of the future.
That concept also included mail and express—particularly storage mail.
What you saw at that time were mail and express trains with passenger-equipped Flexi-Van flat cars. That passenger car you saw at the end was a “rider” or crew car. The NY Central used modified coaches; the Pennsylvania RR preferred “crew cabins” or high-speed equipped cabooses.
The New York Central freely interchanged passenger-equipped storage mail Flexi-Vans with western railroads with which it interchanged. They were common in Milwaukee RR, Burlington and Sante Fe mail and express trains west of Chicago . Some cars were interchanged with the Missouri Pacific through the St Louis gateway.

Railroads On The Rebound

Over the last 50+ years, railroads have changed a lot. Now they are about to change again.

It is all about a combination of economic factors and climate factors.

Since 1950 , railroads have consolidated. Freight moved from a "box car mentality" to a "unit train,mentality". Passenger went from a robust business to a "caretaker" arrangement called AMTRAK. This happened as everybody could drive for free on the Interstate Highway System or fly on an airline system where the government subsidized both airlines and airports. In the meantime, railroad express and railroad post offices went "down the tubes". The old Post Office Department and the Railway Express Agency could not adjust to the new way. UPS and Fex Ex could.
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Leased Lines and Mergers


If you look at our section on the New York Central in 1950 , much of the trackage operated by the railroad consisted of leased lines. Most of the lessors were owned in majority by the Central but a few were owned in part or in entirety by other individuals or companies. Many of these were unprofitable to operate for the NYC but the arrangement could not be changed without the approval of the lessor stockholders. The lease payments were paid back to the lessor stockholders in the form of dividends and it was usually set up that the NYC would pay all the organizational expenses and the property taxes of the property it leased. This was a good source of dividends for the owners, but the Penn Central bankruptcy ended that.

Many wholly-owned leased lines operated as integral parts of the system for decades and were eventually merged into the parent company for taxes or administrative convenience. In other cases their properties were transferred to the parent company and the smaller company either dissolved or just retained as a name on the books. There are a number of railroad companies that legally exist even though their track is long gone, their properties sold and their securities redeemed (or entirely owned by the parent company) but it is not worth the trouble of winding them up or dissolving them. Many others exist because it is cheaper to continue paying their bond interest than merging them and paying a higher rate on the money raised to redeem the bonds.

Here are some interesting examples:
Troy & Greenbush Railroad (5.5 miles) was not affiliated, but operated under lease.

New York & Harlem Railroad (134.4 miles) was affiliated and operated under lease. It still exists today! and owns Grand Central Terminal.

Amsterdam, Chuctanunda and Northern Railroad (now known as the Kellogg Branch)

The Hudson River Bridge Company at Albany still owned the Livingston Avenue Bridge, but the Maiden Lane bridge came down to help Albany auto congestion and save Central lot of money by moving passenger terminal

The Pennsylvania RR absorbed more of its subsidiaries early and standardized their operation more than NY Central. Probably this stemmed from the fact that PRR developed as a corporation assembling a system rather than from a family which initially controlled its empire outside its corporate structure.

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INTERESTING BULLET POINTS


Should the PC merger have occurred? Would things have been better? The Same? / or Worse without the merger?

With a marriage to the C&O it may have been possible for the NYC to survive more intact than what we see with the NS-CSX split up of Conrail.

Some big obstacles to overcome such as New York's taxation, competition with the St. Lawrence Seaway, loss of traffic to I-90, and the shutting down of US manufacturers that relocated off shore.

The virtual de-industrialization of the northeast was a primary factor. It would have been interesting to see if a C&O/NYC and N&W/PRR would have saved the operations but doubtful. The railroads had to pay six years of labor protection for abandonments which in most cases outweighed the scrap value of unproductive lines - not to mention the merger related labor protection. Add the commuters, New Haven, and the internal dissent and you had - Penn Central.

The state of the PRR facilities by 1968 was far below that of the Central. The New York Central had had problems over the last several years, but it had recently turned the corner. Some of this recovery was the result of initiatives begun by the Robert Young / AE Perlman administration, beginning in 1954. Income was on the rise in the 1960's. Key initiatives were new, more efficient yards; passenger service improvement programs like the "Empire Service"; freight service improvement programs like Flexi-Flow, Flexi-Van, and a common sense approach to Less-Than-Carload (LCL). Alfred E. Perlman wanted to merge with C&O and B&O. But after being unable, the board of directors urged to do it with the PRR. The railroads had completely different operating practices.

Neither road might not have made it on there own. Each had to much track, with a shrinking traffic base. This was the era of building the modern highway system, and traffic was moving from the Railroad to the highways. I doubt very much if anything could of saved these once mighty roads. It took a government bailout to bring back the core system of each road.

Given the regulatory climate of the 1960s, it is hard to see any benefits from the merger for the NYC's stakeholders. Deregulation, Amtrak, and public commuter agencies would probably not have become politically possible until bankruptcies revealed that protecting every job and every customer could lead to no jobs and no service.

Both NYC and PRR suffered from the problems that brought down the industry after WW2:high labor costs, money-losing passenger trains and unsubsidized commuters they couldn't get rid of, shrinking traffic, short hauls, regulated rates, difficult abandonments, on and on and on.....But you can argue the PRR dragged the thing down. Perlman rationalized the physical plant of the NYC. Reducing four tracks to two, installing CTC which eliminated dozens of towers and hundreds of operators, and building several modern hump yards and minimizing car handling across the system, cutting long-distance passenger service into the bone, and in general the NYC was a leaner operation with less debt better able to withstand the ebbs and flows of the economy.

PRR still had all those towers and more fixed plant in general, and higher property taxes and maintainence expenses as a result. PRR used it's generated capital in good years to buy pipelines, amusement parks, and charter jets, instead of capital equipment like CTC that reduced operating expenses over the long haul. So, the railroad routinely borrowed money in leaner times in order to operate.

NYC had real estate in Manhattan that generated lucrative non-operating income without further investment in them. PRR had diversified into non-railroad businesses, the income from which was credited to the railroad company, disguising the fact that the railroad itself was operating in the red. NYC on the other hand, actually showed a railroad operating profit right up though 1967, although tiny.

PRR top executives routinely sunk their own money into side investments, usually the same securities or properties they were also putting PRR money into. A definite conflict of interest whose traditions went all the way back to Edgar Thomson and Tom Scott after the Civil War; and included Andrew Carnegie, whose steel mills eventually formed the heart of US Steel.

There were many integrations problems, such as each railroad's computer systems being unable to communicate with each other, no cab signals on NYC engines, no ATS on PRR engines, etc, etc, etc. These things should have been worked out before merger day and were not the exclusive fault of either camp. Possibly both lines would have gone under on their own before the changes began in 1980, but the PRR would have gone down first.

Nearly the entire New York Central was controlled from a dispatcher's office at a division point or in a central location. The Central also believed in good track maintenance and their track and train speeds were high as a result. The NYC was also using a modern system wide dial telephone system where you could dial direct anyplace on the railroad while the PRR was still using ancient "crank and cuss" phones over much of their system. The only thing that was better on the PRR than on the Central was the cab signal system. It was similar to the New Haven cab signal set up and was far superior to the inductive train stop system in use on the Central but this is the ONLY point where the PRR had a better set up. Contrast this with the former Pennsylvania. Outside of the Northeast Corridor between New York and Washington it was not nearly as efficient as the New York Central of the same period was. They had signal towers all over the place and most of them were manned 24/7 as well and this was a huge operating expense and was not as efficient as dispatcher control direct with CTC. The PRR also had helper grades especially between Altoona and Pittsburgh and you would not get over that piece of railroad with just two four motor units. This is the reason that Penn Central routed as much east/west freight over the former NYC as they possibly could and after Conrail got their act together, they phased out much of the former PRR west of Pittsburgh.
The Central New England Railway (later New Haven RR) Maybrook Yard connected to other railroads: Lackawanna, Pennsylvania, New York Central, Lehigh & Hudson River, Lehigh & New England, Erie, Ontario & Western, Lehigh Valley

The Central New England Railway Yard at Maybrook, New York

We have a really new and really cool feature about the Central New England Railway / New Haven Railroad. It is a Journal of the Maybrook Yard. All kinds of previously unpublished and fascinating things!

The Maybrook Line across Dutchess County The "Maybrook Line" was important to New England before the advent of Penn Central and before the Poughkeepsie Bridge burned. This piece of the railroad carried freight from Maybrook Yard, across the Poughkeepsie Bridge to Hopewell Junction where it joined a line from Beacon. The railroad then went to Brewster, then Danbury, and finally to Cedar Hill Yard in New Haven.

The New Haven's Maybrook Line and connections to other railroads

Railroad History of Maybrook Region

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Cedar Hill Yard Driving north from New Haven, Cedar Hill yard cannot be overlooked. Its still used, but not to the extent it was 50 year ago. Imagine, over 9,000 cars handled on one day! Cedar Hill was built between 1910 and 1920. Cedar Hill became in the 1920's the keystone of the whole New Haven Railroad freight operation. It seems to have started out as a more local facility, then grown into that larger role. Or was the idea of making it the center part of the original intention?
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Head End


Railway Express and Railway Post Office
REA RPO Header On passenger trains, railroads operated lots of equipment other than sleepers, coaches, dining cars, etc. This equipment was generally called 'head-end' equipment, these 'freight' cars were at one time plentiful and highly profitable for the railroads. In the heyday of passenger service, these industries were a big part of the railroad's operations, and got serious attention.
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Metro-North Commuter Railroad Crossing a bridge
The New York Central Railroad

See some historic photographs of the New York Central Railroad. First-generation diesels! Passenger and freight runs. Much more!
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Track 61
Here is a picture of Track 61. See what is so mysterious about Track 61 at Grand Central Terminal.. Also find out about a railroad that did NOT make it to Conrail: The New York & Harlem. Find out about Metro-North.
New York Central Branch from DeKalk Junction to Ogdensburg, In 1861, the Potsdam & Watertown line merged into the Watertown&Rome, the name of the new railroad was changed to Rome, Watertown&Ogdensburg, and a 19-mile line built from DeKalb Junction to Ogdensburg. It lasted until the 1980's. Read the whole story.
On June 13, 1845 the Troy & Greenbush Railroad opened between Troy and Greenbush, NY. It is the last link in an all-rail line between Boston and Buffalo. See more random dates in railroad history.
Isn't it amazing how much we all remember (and have forgotten about the NY Central)? 40 plus years? OMG, we rode parlors to Chatham and sleepers to the Adirondacks. Geez, we remember a lot. Why is all this stuff gone? Why did we have a PC and a Conrail.
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ec-bp.com The Forum for Supply Chain Integration


ec-bp was established in 2005 as the advocate for lowering the barriers to the adoption of EDI, and our email newsletter has been published every month since that time. Our focus has expanded beyond EDI to encompas the full gamut of supply chain practices and technologies. In addition, our readership has grown to become the largest of any similarly focused publication, and has expanded to include more than 90,000 professionals involved in nearly every aspect of the supply chain.

Today’s supply chain is more than simple transport of EDI documents. The complexity of maintaining compliance with trading partners, managing the ever increasing amount of data, and analyzing that data to drive constant improvement in processes and service take supply chain professionals far beyond the basics of mapping EDI documents.
New York Central station in Ogdensburg New York Central station in Ogdensburg Take a look at my blog about railroads in Ogdensburg, New York.
I wrote a great blog about Harmon, then I wrote another great blog about Harmon
Penney
Nice Port

We Publish Four Daily Blogs
What Else DO We Do?"

Yes, see our blogs: Penney Vanderbilt; KC Jones; Ancien Hippie; and Crazy Pasta Child.

We manage public relations campaigns for major corporations
(1) New York City's Metropolitan Transportation Authority's SECOND AVENUE SUBWAYimplementation
(2) Florida East Coast Railway's on ALL ABOARD FLORIDA implementation

We work with corporations submitting RFP's (REQUEST FOR PRICES) to United States Government Agencies
An example is FEED THE TROOPS at Wright-Patterson Air Force Base


We sell heritage CD's from a large collection
Penney Vanderbilt
Penney Vanderbilt
Ancien Hippie
Ancien Hippie
Crazy Pasta Child
and Crazy Pasta Child
KC Jones
KC Jones
Penney Vanderbilt
Penney Vanderbilt
The boss
"The Boss"
Pictures of our BlOggers / Writers
Contact us at kinlock@hotmail.com Links to railroad Sites

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